Unionization and IPO Underpricing

59 Pages Posted: 25 Jun 2018 Last revised: 13 Jun 2021

See all articles by Antonios Chantziaras

Antonios Chantziaras

Durham University

Dimitrios Gounopoulos

University of Bath - School of Management

Stergios Leventis

International Hellenic University - School of Economics and Business Administration; International Hellenic University (IHU)

Vangelis Souitaris

City University London - Faculty of Management

Date Written: June 10, 2021

Abstract

This paper investigates the impact of labor unionization on IPO underpricing. We demonstrate that the existence of unions reduces underpricing by 11.20%. Unionized IPOs are associated with downward offer-price revisions, higher cost of capital, inferior firm-operating performance, and incremental failure risk. We argue that union presence discourages investor participation, since investors discount the value of unionized IPOs. We conclude that labor unionization is an important factor in IPO pricing and first-day returns. Our findings are of particular interest to managers, labor unionists, and market participants.

Keywords: Initial Public Offerings, IPO Underpricing, Labor Unions, Unionization

JEL Classification: G10, G39, J50, J51

Suggested Citation

Chantziaras, Antonios and Gounopoulos, Dimitrios and Leventis, Stergios and Souitaris, Vangelis, Unionization and IPO Underpricing (June 10, 2021). Available at SSRN: https://ssrn.com/abstract=3193746 or http://dx.doi.org/10.2139/ssrn.3193746

Antonios Chantziaras

Durham University ( email )

Mill Hill Lane
Durham, DH1 3LB
United Kingdom

Dimitrios Gounopoulos (Contact Author)

University of Bath - School of Management ( email )

Stergios Leventis

International Hellenic University - School of Economics and Business Administration ( email )

14th km Thessaloniki
Moudania
Thermi, Thessaloniki 57001
Greece

International Hellenic University (IHU) ( email )

14th km Thessaloniki
Moudania
Thermi, Thessaloniki 57001
Greece

Vangelis Souitaris

City University London - Faculty of Management ( email )

London
United Kingdom
+44 (0) 20 7040 5131 (Phone)
+44 (0) 20 7040 8328 (Fax)

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